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Lyft announces plans to eliminate surge pricing


Lyft has revealed plans to phase out surge pricing, known as Prime Time, in an effort to attract more riders. On the company’s second-quarter earnings call, CEO David Risher acknowledged that surge pricing is an unpopular practice among riders, stating that it’s a “bad form of price raising” that riders strongly dislike.

Surge pricing, typically triggered when there is insufficient driver availability to meet demand, aims to incentivize off-duty drivers to join the platform and address the increased demand. However, riders generally have a negative perception of surge pricing.

Risher emphasized Lyft’s efforts to eliminate surge pricing due to its substantial driver supply, which the company has diligently worked to achieve.

Lyft’s spokesperson highlighted that the current driver supply is the highest in three years, with a 20 percent year-over-year growth in the driver base.

The average number of hours each driver works has reached a new peak, surpassing 2019 levels. Consequently, the share of rides affected by surge pricing has dropped by 35 percent compared to the previous quarter.

While this decision has led to reduced revenue for Lyft, Risher emphasized its positive impact on riders and the overall market.

Lyft has been lowering prices to remain competitive with its rival, Uber, and to attract riders to its platform. Although revenue per rider has declined by five percent from the previous quarter, the company has seen a nine percent growth in active riders.

Lyft’s move to discontinue surge pricing is aligned with its strategy to improve rider experience and encourage more riders to use its services.

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